DeFi protocols are facing stress tests during the crypto market crash, are they okay?

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From point to surface, the performance of the DeFi protocol in the stress test triggered by this black swan event is analyzed through macro data.

Written by: Pan Zhixiong

After the May 21 evening government agency released a “blow Bitcoin mining and trading activity” requirements, encryption global currency markets continue to occur two days of severe shock, one-day decline of mainstream currency up to 30% more The decline of other currencies even exceeded 50%.

In fact, the market has undergone substantial adjustments since May 19th. Under this extreme stress test, it is another opportunity to observe the efficiency of the DeFi (decentralized finance) system—especially when this system the amount of money involved topped $ 100 billion milestone, some of which are still traded over-pledge assets or execution of leveraged.

This past weekend market volatility since last year is 312 (Black Thursday) rare black swan events and a wide range of high volatility. Last year, the 312 cryptocurrency market experienced a flash crash. The biggest impact was that the clearing engine in the Maker system of the “central bank” on the chain encountered some problems. Fortunately, it resumed operation through auctions and improved protocol design. During this period of severe market volatility, MakerDAO did not encounter the same problem.

However, at 312 hours last year, DeFi has not yet become the mainstream, and it is not a well-known direction in the industry, because the boom of liquid mining has not yet started. Today, the DeFi world is changing rapidly, and the complexity of DeFi business has been Far more than then.

In this context, after experiencing sharp fluctuations in the market again, we hope that by aggregating a number of macro data DeFi world, combined with some of the core DeFi agreement presented this weekend in market volatility in the data, from the point to the surface, in a clear understanding of the the market volatility, these DeFi agreement in this black swan event triggered by stress test performance.

Looking at the overall performance of the DeFi field

DeFi Total Lock-up Volume (TVL): Nearly cut in half

TVL is one of the world used to assess the overall size of the entire core indicators DeFi, its data representative of the chain liquidity of the financial world.

According to DeBank data, the total lock-up volume (TVL) of DeFi protocols in all blockchain networks fell from 130 billion U.S. dollars on May 11 to a minimum of 67 billion U.S. dollars in 12 days, which is nearly half (-48%).

DEX trading volume: record high

Generally speaking, the volatility of the stock market will promote increased trading volume, because DEX may be used for arbitrage or liquidation transaction, there are a lot of chain natively users may hedge by DEX.

In the market crash that has occurred on May 19, the cumulative trading volume of all DEXs is the highest daily trading volume in history, close to 22 billion U.S. dollars.

DeFi protocols are facing stress tests during the crypto market crash, are they okay?

Mortgage lending data: close to half

Almost all also based encryption volatile assets, so as the market volatility, borrowing data may also be a drastic effect on loan agreements block chain is achieved through asset-backed, and mortgage.

Judging from the data on the chain, the total borrowing volume fell from a historical high of US$26.7 billion to US$15 billion, a decrease of 44%, which is comparable to the market decline.

DeFi protocols are facing stress tests during the crypto market crash, are they okay?

Mortgage loan liquidation data: record high

When encrypting large fluctuations in assets, loan agreement may be due to fluctuations in the price of collateral liquidation triggered, so clearing the data also reflects the leverage ratio part of the market. Of course, the high liquidation data does not mean that there is a problem with the DeFi agreement, as long as there are no bad debts or bad debts in these liquidations.

On May 19 and 23, there were successively the highest and second highest on-chain liquidation volume in history. The single-day liquidation volume was US$614 million and US$140 million, respectively. In addition, Venus on the BSC on May 19 suffered a large area of ​​bad debts due to the design of the system mortgage rate, resulting in a liquidation volume of more than 250 million US dollars.

DeFi protocols are facing stress tests during the crypto market crash, are they okay?

Gas: relatively stable

The reaction of Gas on the Ethereum chain has been relatively stable in recent days. Although it encountered an instantaneous gas exceeding 1500 Gwei on May 19, it may be due to robots bidding through Gas during the liquidation auction, or users performing fast transactions when the market fluctuates. . However, the single-day median was only 181, which was not as good as the level of May 11 (306 Gwei), and it gradually decreased in the next few days.

This may be related to the recent Ethernet Square enhance the capacity of the relevant blocks, the number of transactions to enhance the impact of lower block Gas, it may be because more and more deployed Flashbots miners node can be reduced in the MEV Gas auction.

DeFi protocols are facing stress tests during the crypto market crash, are they okay?

Stable currency: continuous growth

From stable currency legal tender or endorsement of assets also continued to maintain growth (also known as general compliance stable currency, but USDT controversy larger), not because of market volatility and outflow block chain or DeFi system as a whole The scale is US$63.4 billion.

DeFi protocols are facing stress tests during the crypto market crash, are they okay?

Oracle call: close to the highest in history

The oracle machine represents the frequency at which businesses such as DeFi on the chain require off-chain or price data. Therefore, during periods of large price fluctuations, the number of times the oracle machine is called has also increased significantly. Although it is not the highest in history, it can also be ranked in the top three in history, with more than 35,000 calls in a single day.

DeFi protocols are facing stress tests during the crypto market crash, are they okay?

Synthetix

Synthetix is a synthetic asset protocol realized through a very high mortgage rate. The native token SNX of the protocol can mint various synthetic assets such as sUSD through a mortgage rate of 5 to 10 times, simulating the value fluctuations of other cryptocurrency assets in the real world or in the real world.

But because of its extremely high mortgage rate, the funding efficiency of the agreement is relatively low. Even so, many people will question the sustainability of Synthetix mode, but fortunately in the stock market in the past few days, Synthetix not step on or downward spiral occurs.

By chain, DeBank and CoinMarketCap data, Synthetix running no significant problems occurred in the past few days, and overall market volatility rather, TVL down from the original high of $ 3.8 billion to $ 2 billion, a drop of about 47%.

From the perspective of the price of Synthetix’s core US dollar stable currency, sUSD , although the volatility is slightly higher, the worst case of the de-anchor situation is that there is an instantaneous price difference of about 7%, which is maintained at a level of about 1 US dollar.

DeFi protocols are facing stress tests during the crypto market crash, are they okay?

Another important data is that mortgage rates. According to data from Synthetix’s official data platform, the mortgage rate is still maintained at 520%, and the data of other projects are also maintained at a relatively safe level.

DeFi protocols are facing stress tests during the crypto market crash, are they okay? Data source: https://stats.synthetix.io

Maker

“The central bank on the chain” Maker 312 last year suffered a problem clearing system, but market volatility in recent days in a good performance, system design visible after the adjustment of the team have solved the problems of last year’s problems.

DAI current circulation of approximately $ 4.4 billion, while the total amount of the entire system of mortgage assets approximates 7.5 billion, overall mortgage rate of about 170%.

DeFi protocols are facing stress tests during the crypto market crash, are they okay?

Clearing data from the point of view, Maker on May 19 liquidated more than $ 41 million, a record high. These liquidations are part of the normal business logic, and so far no bad debts for the 312 period have occurred.

In addition, from the perspective of the price of the US dollar stablecoin DAI issued by Maker, it is more stable than Synthetix’s sUSD, with lower volatility, and the price can remain stable at around 1 US dollar.

DeFi protocols are facing stress tests during the crypto market crash, are they okay?

Terra

The performance of the US dollar stablecoin UST issued by Terra was not satisfactory. The most serious de-anchorship situation occurred since Terra issued UST. UST fell to as low as US$0.93 and has not fully recovered yet.

DeFi protocols are facing stress tests during the crypto market crash, are they okay?

Compared with several other on-chain mortgage stablecoin protocols, the mechanism of UST issued by Terra is not the same. Part of it relies on Terra’s native token LUNA , so it can be regarded as an algorithmic stablecoin supported by LUNA. It is worth noting that, as the market fluctuates, the market value of LUNA is already lower than that of the stable currency UST-many market commentators have pointed out that this may lead to a downward spiral of two assets: If users choose to panic sell UST , LUNA will crash faster.

LUNA’s currency price has fallen by half in the past 7 days, and it is currently rebounding. It may be because the market conditions have changed, or it may be that the team has pulled UST back to $1 through a large amount of financial support. Currently encryption currency community is quite concerned about the future of UST, many expressed that the protocol stable currency risk of these endogenous collateral larger, perhaps you should consider setting some additional mitigation measures to deal with the volatility of the stock market.

DeFi protocols are facing stress tests during the crypto market crash, are they okay?

Float

As a new generation of algorithms is not anchored dollar stable currency, Float just completed last week a founding issue, but bad luck, an opening to hit the ETH market volatility – you know, the early use of ETH Float as collateral, so It must be greatly affected.

The good news is that from the perspective of Float’s price performance, its issue price is $1.618. Although the price fluctuates, the daily auction activities are successfully launched and completed, and the price is maintained at the target price through daily auction activities. Of course, Float once dropped to around $1.

DeFi protocols are facing stress tests during the crypto market crash, are they okay?

On the whole, Float is not quite like a “stable currency” . Its current role is more like absorbing the volatility of the collateral (ETH) through the governance token BANK and auction mechanism, and providing a relatively stable asset.

Perpetual Protocol

Square one is deployed on the Ethernet side chain xDAI derivatives leveraged agreement on behalf of Perpetual Protocol is transactional applications, a month ago was because ETH market volatility, causing prices to collapse in the agreement have flash or “pins” Compared to centralized exchanges, it is nearly $1,000 lower.

However, in the market this time, it can be seen from the candlestick chart that there are no significant pins.

DeFi protocols are facing stress tests during the crypto market crash, are they okay?

Probably because after the last accident, Perp this issue presents a comprehensive improvement measures, including providing more depth, set up billing limit, on-line partial liquidation mechanism. So from this stress test, Perpetual Protocol has improved significantly.

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